Research Symposium 2014

Harvard Business School professors presented their research to colleagues, with topics including speaking up at work, a manager's responsibility to capitalism, and a strategy to fix the health care system.

by Carmen Nobel

Speaking up at work; a manager's responsibility to capitalism; a strategy to fix the health care system. These were the presentation topics at the 2014 Faculty Research Symposium.

At first blush, they may sound a bit disjointed. But a goal of the annual symposium is to showcase the breadth of research going on at Harvard Business School. Held each May on the HBS campus, the event provides the opportunity for a few faculty to share recent work with an audience of doctoral students, HBS staff members, and other professors.

SPEAKING UP

Recognizing problems in the workplace is commonplace. Speaking up about those problems is less so. Why? Because employees fear that contradicting the status quo will put their jobs or reputations at risk, even if that fear is unwarranted.

"We're all especially hard-wired to be wary in hierarchies," said Amy Edmondson. "Nobody woke up this morning and jumped out of bed because they just couldn't wait to get to work and look ignorant, incompetent, intrusive, and negative."

That wariness is costly, because feedback from the front lines is often vital to improving business practices and safety measures. With that in mind, Edmondson discussed how to foster a workplace culture of open communication in her presentation, "Speaking Up and Teaming Up to Build a Better a Better World (Or at Least a Better Organization)."

Edmondson summarized a line of research in which she and colleagues studied communication within several neonatal intensive care units at hospitals in the United States and Canada. The researchers interviewed and assessed the teams across several measures, including professional status (the hierarchy of each team), psychological safety (the extent to which team members felt comfortable speaking up about work-related issues), and leader inclusiveness (the extent to which physicians welcomed and incorporated feedback from nurses and other team members).

They found that while hierarchy structures were similar across all teams, the level of psychological safety varied dramatically from one team to another—and was directly proportional to the level of leader inclusiveness. "It's actually how status is handled that makes the difference," Edmondson said.

Inclusive leaders exhibit three characteristics that lower the fear of speaking up among their employees: such leaders are accessible, proactively invite input, and acknowledge their own fallibility. "Small enabling messages and structures can make a big difference," she said.

THIN POLITICAL MARKETS

Karthik Ramanna's presentation focused on "Thin Political Markets," situations in which business leaders possess specialized knowledge and specialized interest in a political issue, and face little political opposition in the process.

"In any given issue, there's a handful of people who are truly experts…and those are also the people with the strongest commercial interest in the issue," he said. "The rules of the game…are tailored to favor this experienced view."

He cited the example of several meetings in the year 2000, during which the Financial Accounting Standards Board was hashing out rules regarding mergers and acquisitions. At issue was the topic of goodwill, an intangible asset resulting from one company acquiring another company for an amount of money that exceeds the fair market value. Specifically, the FASB was trying to determine whether goodwill should be amortized.

To that end, FASB leaders met with leaders from several major accounting firms, as well as leaders from several major firms (such as Cisco Systems) that frequently acquired other companies. These leaders all knew more about goodwill amortization than almost anyone—but also had self-interested business reasons to oppose it. And they opposed it. And there was nobody at the table arguing for it.

Subsequently, the FASB removed goodwill amortization from its constitution, in favor of fair value accounting.

Ramanna said that there are no unequivocal villains in thin political market situations, but rather "a quilt of special interests." Still, he argued that managers in thin political markets have a moral responsibility to support rules that preserve the legitimacy of capitalism—even if those rules don't directly support their companies' profit margins. "Managers have an agency responsibility to the market system as a whole," he said.

And then, addressing his fellow professors in the audience, Ramanna issued a call to arms. "We need to find ways to get our students to engage with this idea," he said. "Our students will be tomorrow's participants in thin political markets."

VALUE-BASED HEALTH CARE DELIVERY

In their book Redefining Health Care, published in 2006, Michael Porter and Elizabeth Olmstead Teisberg argued that the health care system should be reworked to focus on creating value for the patient. Since then, they have been collaborating with hospitals, policy makers, and researchers all over the world in an ongoing effort to make that happen.

Porter's presentation "Value-based Health Care Delivery" summarized the problems with the traditional health care model and the keys to creating a different one.

Traditionally, he said, the players in the system focused on a particular function rather than a particular ailment. A patient would visit a primary care physician in one location, an outpatient specialist in another, an imaging center in another, a blood lab in another, a surgeon in another, and so on. "The patient was a ping pong ball," Porter said. "This is not a team. Coordination in this model is impossible…It's impossible to create value in this model, no matter how hard you try."

The solution: "We need to organize around the patient's problem, not around the hammer," Porter said.

A value-driven health care system skews vertically, rather than horizontally. Such a system has several key components: It is organized into "integrated practice units" that focus on a particular disease, as well as the conditions associated with that disease. It measures outcome based on the patient's condition before, during, and after care. It measures costs based on the full cycle of care. And it incorporates a bundled payment system that covers the full care cycle.

"Bundles are hard, but we're getting there," Porter said.

Several organizations are now hard at work to bring value-based health care to fruition. The nonprofit International Consortium for Health Outcomes is entirely focused on the mission. Meanwhile, the Cleveland Clinic, The Mayo Clinic, Boston Children's Hospital, and other top hospitals are piloting a process called time-driven activity-based costing, which was pioneered at HBS.

While many schools are more focused on publishing research than applying it, Porter said that partnerships like this set HBS apart. "What's unique about this school is that our aspirations can be broader," Porter said. "We have a deep interest in practice."